El Salvador’s Bitcoin Law Hits Its First Reversal as IMF Pressure Halts Purchases

ByDaniela Kirova September 5, 2026

El Salvador has stopped its government from buying more Bitcoin and transferred management of its existing $632 million reserve to a private operator.

President Nayib Bukele made the move after sustained pressure from the International Monetary Fund, which has long objected to the country’s use of public funds to accumulate a volatile asset, according to El País. The shift marks a concrete reversal for the nation that in June 2021 became the first in the world to grant Bitcoin legal tender status under its Bitcoin Law.

The government has now promised to freeze public investment in the asset going forward, effectively ending a signature policy that defined its global image since 2021.

What The IMF Pressure Changed

The IMF has repeatedly flagged the fiscal risk of a sovereign government holding a large, unhedged crypto position on its balance sheet. The decision to hand day-to-day management of the $632 million Bitcoin holdings to a private operator removes that exposure from direct state control while technically preserving the reserve itself.

Also Read: El Salvador’s Bitcoin Experiment Faces New Scrutiny

The Gap Between Law And Practice

The 2021 Bitcoin Law never required the state to keep buying, but Bukele’s government treated accumulation as policy, publicizing purchases on social media for years. Freezing purchases now creates a gap between the law’s original spirit and its practical enforcement, leaving Bitcoin’s legal tender status intact on paper while the government retreats from active market participation.

Algorithmic Scrutiny And What Private Management Changes

Automated on-chain tracking tools and AI-driven sentiment analysis had made the country’s wallet activity a closely watched public dataset, turning a sovereign policy into a real-time, algorithmically monitored asset. Handing reserve management to a private operator changes what that data can show markets going forward, since purchases and holdings may no longer be transparently traceable through the same government-linked addresses.